Building Supply Market Intelligence: Which Data Sources are the Best?

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Often, it’s all about how quickly one can digest something.

No, I’m not talking about Joey Chestnut’s eating-champ prowess. I’m talking about market intelligence.

In a procurement professional’s day-to-day, that sentiment has certainly become more widespread than ever. In fact, with time at a premium, the majority of procurement pros — from junior buyers all the way up to CPOs — are faced with this issue every day.

However, it can pay dividends to approach supply market intelligence in a strategic way.

We recently launched a series called “Ask Spend Matters,” in which we field and answer readers’ procurement and supply chain questions. (Check out the stories we’ve already published on this page.) An anonymous asker submitted the following question:

“Supply market intelligence is highly relevant for procurement professionals. What data sources do you recommend?”

Before we entertain any kind of shortlist, when it comes to supply market intelligence, it can often be difficult to know where to begin, let alone how deep to go.

How Relevant is Supply Market Intelligence, Exactly?

To prove our question asker’s first point, here’s a look at some past research courtesy of Hackett Group that evaluated the relative priorities of 14 different competencies and services offered via Procurement Centers of Excellence (CoE):

14 different competencies and services offered via Procurement CoEs

Courtesy of The Hackett Group

Turns out supply market intelligence was very near the top of the list as a competency that was not only working well, but also a focus area for the following year. But that was back in 2012–2013.

More recent Hackett research shows that, of the top five services enabled in procurement CoEs, supply market intelligence clocks in at No. 3 — with roughly 75%–80% of respondents indicating the area as “in place and working well” or at the very least “a focus area.”

"SMI is critical as much for supply risk as it is for value creation," says Pierre Mitchell, Spend Matters’ chief research officer. "And this can help in justifying and funding of SMI."

"In other words, it's a cost of doing business rather than a nice-to-have discretionary investment that must go through business case hell," he says.

So, yep, supply market intelligence definitely has been, still is and will continue to be quite important.

What Types of Sources Am I Dealing With?

The types of market intelligence sources at one’s disposal will vary based on a variety of factors. Are you part of a large, mature multinational company whose procurement organization has access to a CoE? Or are you a jack-of-all-trades buyer in an small or medium enterprise who scrambles to get by?
Either way, defining the types of sources at play may be helpful.

According to a presentation at ISM 2017 by Patrick Cannaughton, research director at Hackett Group, source types generally land in three buckets:

Suppliers

  • Company websites
  • Financial statements/reports
  • Request for information
  • Supplier interviews

Internal Sources

  • Internal stakeholder interviews
  • Performance reporting
  • Supplier relationship management (SRM) program

External Sources

  • News feeds and alerts
  • Price index forecasts
  • Blogs and social media
  • Peer companies
  • Research services
  • Advisory Programs (such as Hackett’s … or even Spend Matters’)

Recommended Sources and Approaches? It Depends, Of Course!

In a similar vein, what the best data sources are depends on how you and your organization plans to use them and your overall goals, not to mention the industry you’re in. Again, certain marketing, strategy and global manufacturing firms will have the money for a plethora of go-to sources. Mom-and-pop tooling firms, perhaps not so much.

Mitchell offers some key questions to ask yourself:

  • Is it cross-category general SMI that is served up as a broad resource for tactical sourcing of tail spend by an internal ‘buying desk’?
  • Is it supply chain intelligence from an offshore provider to serve up to a "virtual CoE" that category managers can tap into based on stakeholder needs?
  • Or is it a one-off requirement for a high-impact sourcing project where you need the latest/deepest insights from recent deals in the market by a world's leading authority type person/team?

Of course, getting this all in one place from one source is nigh impossible.

Two things to keep in mind: the simplest approach to gathering data may be best; and, if your firm has the budget or buy-in, be sure to leverage the CoE approach for best strategic results.

The Quick and Dirty: Get Dangerous With Google Search

“I will let you in on some dirty little secrets to find really good stuff out on the open web that I’ve learned over the years in procurement research,” writes Mitchell. Here are a few of Pierre’s tips to land on the best examples of Cannaughton’s list above.

First off, freshen up on Google’s features here to get an idea of its many capabilities. Then:

Be smart with search terms. Don’t assume that web content will use your exact terminology. For example, an article might use the term “purchasing” instead of “procurement.”

Use image search to search visually for graphs and frameworks. For example, type in “supplier segmentation” and you’ll get all sorts of images of segmentation models.

Use the“filetype:” modifier to find PDF files, PPT files, etc. If you want to find an example document such as a supplier code of conduct, just type in “Supplier code of conduct filetype:pdf.” You’ll be able to find various companies’ supplier portals from all over the globe. Also, universities are good sources of publicly available info, so consider using the site: modifier as well (such as “purchasing portal site:edu”). These modifiers are a good way to find experts’ content.

Also, feel free to use custom search and mash up all of the above to come up with your own unique search approach. Even utilizing predictive typing (for example, keying in “Grainger vs.” and letting Google recommend options based on most popular past searches) can yield unexpected insights.

More Advanced: The CoE Approach

When it comes to building a market intelligence CoE within your firm, achieving clarity in your team’s objectives is paramount.

Speaking at ISM’s Metrics and Analytics Symposium in Philadelphia, Grace Zacharek, DuPont’s global market intelligence and reporting analytics team leader, recommended defining what the market intelligence CoE will cover (such as industry dynamics, cost models, commodity management, technology, markets and suppliers).

According to Spend Matters Founder Jason Busch’s coverage, Zacharek noted that “the primary purpose of a market intelligence CoE function in procurement … should be ‘to make smart decisions and realize sustainable cost savings and growth — and to make recommendations actionable.’”

Mitchell agrees, and maintains that the smartest initial decisions involve a key pairing. “It’s not really about the size of the toolbox (or who does what departmentally), but making sure you have the right tools for the job and master craftspeople who can wield them and teach others to use them,” according to Mitchell.

Data Source Spotlight: If You’re Strategically Sourcing a Particular Category...

Circling back to the beginning and our anonymous question-asker: we found out that the asker works for a large global manufacturing company, and has already has an internal market intelligence CoE in place for the their team.

Not only that, many of the data sources the team uses for category-specific intel are the usual suspects — CRU, IHS, Bloomberg, Platts, Beroe Live and the like. So where to go next?

For the sake of argument, let’s focus on sourcing the category of industrial metals. A large component of any metals procurement professional’s job is grappling with and understanding current and future commodity pricing. Googling spot prices, building price models using CRU indexes and other time-tested approaches are familiar to many in metals purchasing.

However, it may behoove category managers and other practitioners to explore different applications, such as price benchmarking.

“Benchmarking is the only true way to see if the prices you are being quoted or are paying are competitive,” said Lisa Reisman, founder of Spend Matters’ sister site MetalMiner and CEO of parent company Azul Partners.

Other industry segments have long ago adopted price benchmarking including the electronics industry, apparel, automotive and the plastics industry to name a few.

So why should a benchmarking data source be in a practitioner’s arsenal?

“Benchmarking allows those that are doing long-term agreements to see how their negotiated prices perform throughout the entire year,” Reisman told me. “Moreover, benchmarking allows organizations to lower their average costs by running spot purchases through a neutral third-party application that validates and allows for full price discovery.”

Essentially, the ensuing metal price transparency brings buyers and sellers closer together by establishing trust. That type of transparency has been hard to achieve historically in the at-times nebulous discrepancies between index pricing and market prices.

For more specific benefits of benchmarking for buying organizations, check out this piece.

What Can We Conclude?

As Mitchell notes, “supply market intelligence is a monstrous topic, and there are so many resources out there that it’s basically impossible to list them all here” — or anywhere, really.

But as we’ve shown, by making appropriate considerations at the outset for what your organization is looking to achieve, how much money you have to spend and how much you’re willing to roll up your sleeves, you can’t lose. You never know — the next game-changing data source could be lurking around the corner.

A big thank you to our asker for asking this question, and if you have any other data source suggestions or thoughts on how to approach supply market intelligence, please let us know in the comments. For a more specific SMI need, contact our analyst team.

Anything else you’re wondering? Ask us!

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